gold loan

Most Indian households have at least some gold lying around, usually in a drawer. The good news is that they can be put to good use when required. Selling your gold might be a simple way to get the cash you need right now. Without having to liquidate your gold, you may be able to get a loan from a bank. Customers needing quick cash may turn to the many Indian banks and NBFCs that provide gold loans at low-interest rates. However, before asking for a gold loan procedure, you need to learn about the procedure, advantages, and disadvantages.

What are the steps one must take to apply for a gold loan?

The steps you take to get a gold loan balance transfer might differ depending on where you apply for financing. Gold loans are secured loans in which the borrower receives cash in exchange for pledging gold as security. You may visit a bank with the gold you want to pledge and the appropriate papers. 

When the lender checks the gold for purity and weighs it, they have determined its market worth. The maximum loanable amount secured by the gold is capped at 80% of its calculated value. Checking the documentation is allowed once the value of the gold has been established. Lenders are more likely to grant money when they believe there is a good prospect of repayment.

Now, customers of banks and NBFCs may apply for gold loans online or via mobile apps. Even if you apply for a gold loan procedure online, you may still have to visit the lender in person to finalize the transaction. The online gold lending function is not available without first physically depositing gold at the lender’s location. 

A lender’s customer site or mobile app will allow you to register and link your bank account once this is complete. In the future, if you have an urgent need for cash, you may apply for a gold loan and have the available credit sent to your bank account in a matter of minutes, regardless of where you happen to be.

Applying for a gold loan on Paisabazaar.com is another option. You may receive loan approvals in one convenient spot, compare gold loan programs from different banks, and determine whether you are eligible for a gold loan.

What use does borrowing gold serve?

  • Gold loans are secured loans, the standards for approval are laxer, and the documentation is often less, which translates to a faster approval time and a lower APR. A credit check is not required for loan applications. The loan is often dispersed within a few days. Those approved for a gold loan online may get the money quickly, a few minutes after submitting their application.
  • Gold loans, as secured loans, have a lower interest rate than unsecured loans like credit card cash advances or personal loans. Gold loans may lower their interest rates by utilizing collateral other than gold.
  • There are no application or processing fees for a gold loan at many banks and NBFCs. If charged at all, loan origination costs are generally less than one percent of the total borrowed.
  • Some banks charge a prepayment penalty of 1%, whereas other lenders don’t charge anything.
  • Since the gold itself is used as security, the lender will not ask for evidence of income if they provide you with a gold loan. Therefore, a gold loan is available to anyone, regardless of their ability to repay the debt.
  • In the case of a gold loan, your credit history is irrelevant. A gold loan’s value is established not by the borrower’s capacity to repay the loan or by the borrower’s credit history but by the value of gold in the market at the time of the loan’s issuance.

Where, exactly, do the negatives of a gold loan lie?

  • A gold loan procedure is a kind of collateralized lending in which the loan amount is linked to the value of the borrower’s gold holdings. 
  • The loan amount is calculated based on a percentage of the property’s value called the LTV ratio. Gold offered as collateral must be worth at least 50% of the loan amount and may be worth as much as 80%. Even if the value of your gold is now at Rs. 5 lakhs, you will only get up to Rs. 4 lakhs.
  • If you default on a gold loan, the lending institution may confiscate and auction off your gold. If you fail to repay a loan for gold, the lender might take legal action like this.
  • Use a gold loan EMI calculator to calculate the loan amount against your gold ornaments.

Most Indian homes have gold in a drawer. They’re useful when needed. Selling gold may help you acquire cash quickly. You can acquire a bank loan without selling your gold. Hope this will help you understand the gold loan procedure.

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